PROJECT MANAGEMENT SUMMARY
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Chapter 1
After completion of this chapter, you should be able to:

Identify the differences between functional and project management

Explain why project management is necessary in business today

Name the major organisational structures and explain the advantages / disadvantages of each

Identify the requirements of an effective project management system
Chapter 2
After completion of this chapter, you should be able to:

Define the roles of the project manager and the project team members

List the skills of a project manager

Explain the balance needed in responsibility, accountability, and authority

Define the roles of project sponsor, customer and other stakeholders
Chapter 3
After completion of this study unit, you should be able to:

Collect requirements, including identifying problems or opportunities that a project will address

Define a project in terms of its basic objectives (time, cost, and scope), and understand the basic project reviews that may be
conducted

Create a work breakdown structure for a simple project
Chapter 4
After completion of this study unit, you should be able to:

Estimate the time and cost needed to complete each of the activities in a project

Describe various estimating methods

Explain why estimates are not always precise

Describe the three basic types of contracts and explain when to use each
Chapter 5

Create a network diagram

Determine the critical path
Chapter 6

Create a project schedule

Prepare a project resource plan

Prepare a project budget plan

Describe the risk management processes of identifying, analysing, and responding to project risk

Explain how to get approvals and compile a comprehensive project plan
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Chapter 7
After completion of this study unit, you should be able to:

Explain how to set up a monitoring and management process you can use throughout the life of the project

Describe how to use project plans and status information to manage time, cost, scope, and resources

Identify key components of a change control process
Chapter 8
After completion of this study unit, you should be able to:

Explain the various types of project evaluations that may be conducted

Analyse and describe issues to consider as you prepare project reports

Explain the basic steps in effectively closing a project
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1.1. What is project management?
Project management consists of the knowledge, skills, methods, techniques, and tools used to plan and manage project work. It
establishes a sound basis for effective planning, scheduling, resourcing, decision making, management, and plan revision.
1.3. Project management today
Today, modern project management is a premier solution in business operations. Large and small organizations recognize that a
structured approach to planning and managing projects is a necessary core competency for success.
1.4. Functional work vs. Project work
1.4.1 Functional Work
Functional work is routine, ongoing work. Each day, secretaries, financial analysts, and car salespeople perform functional work
that is mostly repetitive.
The following are distinguishing characteristics of functional work:
 Functional work is ongoing, routine work.
 Managers manage the specific function and provide technical direction.
 People and other resources are assigned to the functional department.
 Functional departments are responsible for the approved objectives of the function, such as technical competency, standards of
performance and quality, and efficient use of resources.
1.4.2 Project Work
In contrast to ongoing, functional work, a project is “a temporary endeavour undertaken to create a unique product, service, or
result”. Projects are temporary because they have a defined beginning and end.
The following are distinguishing characteristics of project work:
 Project work is a unique endeavour that has a defined beginning and end.
 A project manager manages a specific project or projects.
 People and other resources are typically not assigned to project managers on an ongoing basis, except for project management
support.
 A project manager is responsible for the approved objectives of a project, such as budget, schedule, and scope.
Functional
Project
Type of work
Repeated, ongoing.
Unique and often involves change.
Focus
Operations,
accomplishing,
effective
Completing the project.
work
Management responsibility
Managing people.
Managing work.
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Budgets
Ongoing operational budgets.
Project budgets to fund specific projects
Responsiveness to customers and
Less responsive. Longer response time.
More responsive. Shorter response time
Consistency and standards
Industry standards.
Fewer standards because work is unique.
Cross-cultural relevance
Varies across cultures.
More constant across cultures.
changing environments
1.5. Why project management is necessary in today’s world
Project management helps sell products and services by positively differentiating them from their competitors. Project management
is one of the most important management techniques for ensuring the success of an organisation. The global marketplace and ecommerce are forcing organizations to change.
Today’s Business Trends
 The focus is on high quality, speed to market, and superior customer satisfaction. This can be accomplished only across functional
lines of authority in a project environment. With the shift from mass production to custom production of goods and services, project
management is an increasingly important aspect of a responsive management style.
 Pay is determined by skill level and the marketability of a person’s services rather than by managerial hierarchy.
1.5.1 A Proactive Management Style
Today’s trends mean that management expects more with less. There is more pressure with less time, more work with less staff,
and more cost management with less tolerance for mistakes. The solution to this dilemma lies in a proactive rather than reactive
management style. Systematic project management is a proactive style.
1.9. Organisational structures
The organisational structure strongly influences how efficiently project management operates. It often constrains the availability
of resources or the terms under which resources are available to the project. Organizational structures typically span the spectrum
from functional to project, with a variety of matrix structures in between. The next sections describe the characteristics, advantages,
and disadvantages of functional, project, and matrix organisational structures.
1.9.1 Functional Organization
The classic functional organization is a hierarchy in which people are grouped into functional divisions, such as marketing or
production. Each division has its own project managers who report to the head of the division.
1.9.1.1. Characteristics
 Project managers operate within the division and have a level of expertise within their areas of responsibility. For example, project
managers in the marketing division come from the ranks of salespeople.
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 Directors of the functional divisions manage both project and functional personnel. They are responsible for defining
requirements, scheduling work, setting priorities, providing facilities, acquiring and managing resources, adhering to company
policies, and ensuring quality.
 People are assigned to work on projects for which their skills and services are needed. They might be moved around within the
division as needed.
1.9.1.2. Advantages
 Projects can be completed more accurately. Because project managers and team members have expertise in the functional area.
This means that fewer changes will be made and that a more practical end product can result.
 Project personnel are accountable for their work and they are committed to it.
 Because personnel have functional expertise, learning time is reduced. Problem situations can be identified and corrected quickly.
1.9.1.3. Disadvantages
 The focus on the needs of the functional division might make it difficult to see and respond to the needs of the organization as a
whole. Enterprise policies and practices might not be enforced uniformly across divisions.
 Project management and status reporting to upper management is not standardised across the organisation. It might be difficult
for senior executives to manage the various projects within the organisation.
 Project costs tend to have little or no accounting. so, it might be difficult to identify and account for the true cost of a project.
 It is more difficult to staff and run projects that span divisions.
 Good project managers cannot easily be moved across divisions to more critical projects.
1.10. Project Organisation
In a project organisation, projects are centralized in a separate division of skilled project managers that serves the project
management needs of all divisions of the company. A centralized project management office is responsible for the direct
management of all the projects in an organisation.
1.10.1.1. Characteristics
 A central group is responsible for planning, managing, and reporting the progress of all projects under its domain.
 This centralized project office develops and refines project management processes, practices, and standards and implements them
uniformly throughout the organisation.
 Project managers typically manage shared resources across all projects.
1.10.1.2. Advantages
 Common standards of planning, managing, and reporting exist throughout the life of each project
 Highly skilled project managers can be available for the benefit of all.
 Costs can be reduced by using common tools (such as project management software) to manage all projects.
 Centralised data from all projects can be analysed and applied to future projects to improve the accuracy of estimates and practices.
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1.10.1.3. Disadvantages
 Standards and documentation can become excessive, and without careful vigilance, the centralisation of project managers and
practices can become self- serving. Rather than serving the needs of the project office.
 Project managers might not have the technical background needed for a project, and might have little access to people with the
appropriate knowledge and skills.
 Project managers might seem unresponsive to the needs of people who request their time and skills
1.13. PROJECT LIFE CYCLE
A good project management system follows a standard project life cycle with defined project phases. The project management
profession to provide a general framework for starting projects, organising and preparing, carrying out the project work, and closing
projects.
The PMBOK® Guide defines five general process groups:
1. Initiating: Defining and authorizing the project.
2. Planning: Establishing the project scope, refining the objectives, and defining thecourse of action to attain the objectives.
3. Executing: Integrating people and other resources to carry out the work defined in the project plan.
4. Monitoring and Controlling: Tracking, reviewing, and regulating the progress and performance of the project plan, identifying
where changes to the plan are required, and taking corrective action.
5. Closing: Finalising all activities across all the process groups to formally close the project.
2. DEFINING THE ROLES OF THE PROJECT MANAGER AND THE TEAM
2.1. The role of the project manager
The project manager is the person assigned to manage a specific project, and the one who is expected to meet the approved
objectives of a project — including project scope, budget, and schedule. She or he has overall responsibility for planning,
organising, integrating, managing, leading, decision making, communicating, and building a supportive climate for the project.
Specifically, the project manager:
 Leads the project and provides vision, direction, and encouragement.
 Balances quality, availability of resources, and risk management.
 Schedules appropriate feasibility reviews, in order to ensure that the project is realistic, necessary, and well-defined.
 Determines the schedules, resource plans, and budgets necessary to accomplish the project objectives.
2.2.2 Teamwork
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In working with team members, project managers use a combination of formal authority and persuasion skills. Teamwork is a
critical factor in a project’s success, and one of the primary responsibilities of a project manager is to lead an effective project team.
Project managers should have the interpersonal skills necessary to build, motivate, lead, and inspire a project team to perform well
and achieve the project objectives.
2.2.1 Project Management Skills
Project management skills include the tools needed to plan and execute a project, such as being able to estimate costs, and to prepare
workable schedules and adequate budget plans.
2.2.2 Teamwork skills
In working with team members, project managers use a combination of formal authority and persuasion skills. Teamwork is a
critical factor in a project’s success, and one of the primary responsibilities of a project manager is to lead an effective project team.
Project managers should have the interpersonal skills necessary to build, motivate, lead, and inspire a project team to perform well
and achieve the project objectives.
Critical skills needed by a project manager include the following:
 Developing a trusting, dynamic, and cohesive team culture.
 Providing mentoring and training opportunities for the team to acquire the knowledge and skills necessary.
 Motivating the team by providing challenges and opportunities and helping them understand the importance of the project.
 Providing timely feedback and support to the team.
 Recognizing and rewarding good performance.
 Communicating effectively.
 Managing change.
 Resolving conflict.
 Encouraging collaborative problem-solving and decision-making.
2.2.3 Integration Skills
The project manager’s primary duties are to coordinate the many elements of the project. In particular, the various phases of project
work such as planning, execution, reporting, and management must be integrated. For example, the project manager might have to
integrate electrical drawings from the engineering staff with functional specifications from the civil engineers.
2.2.4 Technical Skills
Since project managers do not perform the actual work of the project, they do not need the same technical skill level as the people
doing the work. However, the more expertise the project manager has in the technical area of the project, especially in highly
technical projects, the greater the manager’s effectiveness in managing the project.
2.2.5 Knowledge of the Organization
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The project manager must understand the company culture, policies, personalities, or politics. The project manager negotiates with
many people and needs to know their personalities, needs, and desires. The more the project manager knows about the organisation,
the better equipped that manager is to manoeuvre around pitfalls and get what is needed for the project.
2.6. RESPONSIBILITY, ACCOUNTABILITY, AND AUTHORITY
2.6.1 Responsibility
Responsibility requires an agreement between two or more people for the purpose of achieving a desired result. A project manager
is responsible for accomplishing the goals of the project; however, the team leader might assign all or part of that responsibility to
other people on the team.
responsibility
authority
accountability
2.6.2 Accountability
Accountability is a consequence of assigned responsibility. When a project manager assigns responsibility to another person, the
manager must hold that person accountable for achieving the desired result or provide consequences for poor performance, such as
a negative employee rating, deduction in pay, reassignment, probation, or termination. The accountability must be consistent with
the responsibility assigned. For example, quality of work performed, adherence to schedule, and completing the job within budget.
2.6.3 Authority
Authority is the power given to a person to complete the assigned responsibility. It includes the appropriate access to resources to
complete the job, such as access to personnel or signature authority for the expenditure of funds. Authority must be commensurate
with the responsibility assigned and appropriate to the accountability.
2.6.4 Maintaining the Balance
Project managers must maintain good balance in assigning responsibility, delegating authority, and holding people accountable.
The authority must be appropriate for the responsibility, and the accountability must be commensurate with the authority and the
responsibility.
Successful organizations have written policies and procedures that define how responsibility, accountability, and authority work in
the project management environment. It is important to define in writing the specific responsibilities and authority given to the
project manager, in terms of personnel, equipment, materials, and funds.
2.8. Roles of team members
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Team members can have various roles in the project, such as engineers, technicians, construction workers, and others needed to
perform the project work.
2.10. Defining the roles of project sponsors, customers, and other stakeholders
For every project, it is important to clearly identify the project sponsor who requested the project, the stakeholders who have an
interest in the project, and the customer who will use the product, service.
2.10.1 Project Sponsor(s)
The project sponsor is the person (or group) who requests the project. The project sponsor might come from a variety of sources,
such as senior management, middle management, functional managers, or other project managers.
2.10.2 Customers
The customer is the person or group of people who will use the product, service.
It is important to identify and consult with the customer throughout the life of the project. Many projects fail because they do not
meet the needs of the customer.
2.10.3 Other Stakeholders
Stakeholders may be people in other departments, suppliers, contractors, vendors, government agencies, management, or
stockholders in the company. Some projects fail because the needs of a stakeholder were not addressed. It is as important to manage
stakeholder expectations as it is to manage the expectations of project sponsors and customers. If stakeholders have concerns about
the project, they may be able to exert considerable influence on those who make project decisions.
3. DEFINING THE PROJECT
This chapter covers the initial steps in project planning. The first step is to define the problem or opportunity that the project will
address, and collect project requirements. The next step is to define the project objectives in terms of time, cost, and project scope.
3.2. Defining the problem or opportunity
The more the project manager understands the issues surrounding the project, the greater the likelihood of a successful outcome.
For example, if a project involves the construction of a new plant, the project manager needs to:
 Know how the new plant will operate.
 Understand the needs of the users of the new plant.
 Understand why the project sponsor wants the new plant.
 Clearly view what is involved in constructing the plant and what is expected of him.
 Be sure the new plant will actually solve the problem at hand
The following actions may help you define the problem or opportunity:
 Get from the project sponsor a clear definition of the problem to be solved or the opportunity the project will take advantage of.
Also, this may help you avoid damaging oversights that may not be obvious to the project sponsor.
 Determine the project sponsor’s needs and wants. When time and money are limited, the planning and budgeting process may
have to sacrifice some wants in favour of needs.
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 Gather sufficient background information about the current situation. Do not blindly accept information you are given without
appropriate confirmation to discover all the issues.
 Learn and thoroughly understand the business reasons for the project and the sponsor’s motive in undertaking it. This
understanding provides a basis for balancing the budget, schedule, scope, quality, resources, and risk.
3.3.1 Collect Project Requirements
the following types of requirements for your project:
 Business needs (the problem or opportunity).
 Business objectives (what the organization expects to accomplish by the project).
 Functional requirements (considering the business processes that the project will need to function within).
 Non-functional requirements (such as level of service, performance, security, safety, compliance with regulations, etc.).
 Quality requirements.
 Acceptance criteria.
 Impacts to other departments within the organization (or outside the organization).
 Support requirements.
 Training requirements.
3.3.2 Types of Projects
Projects may be categorized as one of three types:
1. Market-driven: Producing a new product in response to market needs. For example, a software company sells products and
maintains market share by creating quality programs that meet consumer needs.
2. Crisis-driven: Quickly solving a specific problem. For instance, in response to defective automobile tires.
3. Change-driven: Changing operations to match the current environment or to be more effective. For example, projects may be
driven by regulatory needs, be defined by maintenance requirements.
3.5. ESTABLISHING PROJECTOBJECTIVES
Once you have clearly identified the problem or opportunity, the next step is to define the basic objectives of the project, including
what is to be done (specific end results), how it will be done (quantity, quality, or special requirements), when it will be complete
(deadline), and how much it will cost.
Consider the three main aspects of project objectives:
1. Cost: The money and resources required to get the job done—including people, equipment, and other allocations.
2. Time: The time required to get the job done.
3. Scope: A description of all the deliverables — the end products, services, processes, or other results to be provided at the end of
the project, along with their features, functions, and a description of their quality.
The project objectives must be SMART (Specific, Measurable, Agreed upon, Realistic, and Time/Cost-limited).
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SMART objectives are:
 Specific. The objectives must be so clear and well defined that anyone with a basic knowledge of the project area can understand
them. They must precisely define what the project will and will not do.
 Measurable. Objectives must be defined in measurable terms. To be successful, you must be able to measure and report on the
progress.
 Agreed-upon. The project manager, project sponsors, and customers must agree on the project objectives. All stakeholders must
agree that the end result will solve the problem or respond to the opportunity defined.
 Realistic. The project objectives must be achievable, given the available resources, knowledge, skills, and time.
 Time/cost-limited. The objectives need to be framed within clear time/cost goals.
3.6.2 Cost Considerations
Costs include the money and resources required to complete the project, including people, equipment, and materials. The cost of
the project is influenced by:
 Compliance with governmental or internal standards.
 Technical requirements and administrative needs
 Availability of resources with the appropriate skill.
The project manager must establish performance standards to determine how to measure cost performance.
3.6.3 Time Considerations
The project schedule is easy to measure and is often given more attention than cost and scope.
Project managers must balance the schedule with the project scope, budget, and resources available. Project managers must
establish performance standards to determine how schedule performance will be measured.
3.6.4 Scope Considerations
A good scope statement clearly defines all the work that must be performed to deliver a product, service, or result with the specified
features, functions, and level of quality. It describes what will and will not be completed at the end of the project. A complete scope
statement includes technical specifications, performance requirements, facilities requirements, ground rules, constraints,
exclusions, procedures, logistics, safety regulations, security issues, and environmental considerations.
3.7.2 Feasibility Study
A feasibility study addresses questions such as the following:
 How realistic is it to expect that the project can meet the stated objectives?
 How realistic are the project scope, budget, and time requirements?
 Can the appropriate resources be made available when needed to complete the project?
 Are sufficient funds available to complete the project?
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 Does the organization have the technical expertise to accomplish the project?
A feasibility study can be done in-house or by an external group. It can be useful to benchmark other organizations that have tried
similar projects and to learn from their failures and successes.
3.7.3 Benefit-Cost Analysis
A benefit-cost review analyses the costs and expected benefits of the project:
 What benefit will the organization get from completing this project?
 What is the value of the promised advantages, considering the amount of money involved, the time needed to complete the project,
and the resources required?
A benefit-cost ratio provides a measure of the expected profitability of a project by dividing expected revenues by expected costs.
3.9. Creating a work breakdown structure
After defining the objectives of the project, the next step is to break the project down into manageable pieces in a work breakdown
structure. A work breakdown structure defines the work to be completed in the project. It is a graphical representation (diagram)
of the project, showing its component parts.
The work breakdown structure is the basis for estimating time and costs and for allocating resources. If the work breakdown
structure is faulty, all further planning will also be faulty.
In preparing a work breakdown structure, keep the following in mind:
 Use any category that makes sense for your project. This might include components of the product, functions, organizational
units, geographical areas, cost accounts, time phases, or activities.
 Do not be constrained by sequence. The diagram does not need to represent a logical or time sequence of events.
 The diagram does not have to be symmetrical. The number of levels might vary from one branch to the next. Divide each branch
into the number of levels needed to adequately define the project.  Each box is a summary of the boxes in the levels below it.
 The final box in each branch must end in a product or deliverable. These must be measurable and definable in terms of an end
result.
 The boxes in the lowest level are called work packages. They represent the lowest level of detail you want to estimate, schedule,
monitor, and manage. They should represent eight to eighty hours of work. Each work package can be divided into specific
activities. For each work package, describe the conditions that indicate task completion—what must be delivered to consider the
activity finished.
 The sum total of boxes must represent the complete project. Be sure to leave nothing out. When all these deliverables are
completed, will the project be done?
 The entire project team should be involved in developing the work breakdown structure.
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 When you finish the work breakdown, you should review it with the project sponsor and customers. This is to ensure that it is
complete and that it addresses their specific concerns.
3.9.1 Job Aid: Work Breakdown Structure Checklist
When you develop a work breakdown structure, be sure to include these often-overlooked activities:
 Project management. Include the budgets and resources needed to manage the project. Include costs for the project manager,
support staff, project office, and computer support.
 Documentation. The documentation includes lessons learned, how the end product differs from the project plan (describe the “asbuilt” condition), and how the end product functions.
 Non-work financial components. If you include items such as purchases, travel, and consulting fees, the work breakdown structure
can create a complete project budget consisting of all the work components and these non-work financial components.
 Product implementation. Projects that deliver a great product or system can fail if they do not implement the product or system.
This can include product delivery, user training, communication plans, or marketing plans.
 End product evaluation. Does the product perform as expected? Is the problem solved? Have you successfully taken advantage
of the opportunity?
 Project closure. This includes the time, budget, and resources needed to close the project office, reassign project personnel, and
close financial accounts.
 Product retirement. Include the plans to retire the product after its useful life. Organisations often require that the project that
created the product or system include the plans—and even the budget and resources—to retire it at the end of its useful life.
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4. ESTIMATING THE ACTIVITIES
4.4. Estimating methods
The following are the most effective estimating approaches: expert judgment, analogous estimating, parametric modelling, bottomup estimating, and simulation modelling.
4.4.1 Expert Judgment
Expert judgment is an estimating technique that relies on the experience of others to provide cost or duration estimates. It involves
consulting with experts who, based on their history of working on similar projects, know and understand the project and its
application. It is important that the “experts” use historical information from other projects.
4.4.2 Analogous Estimating
Analogous estimating uses the actual costs and durations of previous, similar projects as the basis for estimating the current project.
It uses historical information from the organisation as well as industry standards.
4.4.3 Parametric Modelling
Parametric modelling uses mathematical parameters to predict project costs. An example is residential home construction that is
often estimated using a certain dollar amount per square foot of floor space.
4.4.4 Bottom-Up Estimating
A bottom-up approach estimates the cost and duration of the individual work packages from the bottom row of activities of the
work breakdown structure, then totals the amounts up each row until reaching an estimate for the total project. This approach can
produce a more accurate estimate, but at a higher cost.
4.4.5 Simulation Modelling
In this approach, a computer calculates multiple costs or durations with different sets of assumptions. Simulation can be more
accurate than other types of estimates, and is principally used on large or complex projects.
4.6. Precision of estimates
The greater the detail, the greater the cost and time required to get the estimate— leaving less time and budget to accomplish the
project. To increase the accuracy and consistency of your estimates, you might want to:
 Use several independent techniques and sources.
 Compare and iterate estimates.
There are three basic types of contracts:
fixed-price, unit-price, and cost plus
4.15.1 Fixed-Price Contract
With a fixed-price contract, the vendor agrees to do the total work for a fixed price. The vendor assumes the risk of unforeseen
problems in exchange for a larger profit. This type of contract is appropriate when dealing with unknown vendors or when the
project manager anticipates that the work is risky.
4.15.2 Unit-Price Contract
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With a unit-price contract, the vendor agrees to a preset amount per unit of service and the total value of the contract is a function
of the quantities needed to complete the work.
4.15.3 Cost-Plus Contract
With a cost-plus contract, the vendor agrees to do the work for the cost of time and materials, plus an agreed amount of profit.
Cost-plus contracts are used when dealing with in-house providers or trusted vendors over whom you have great control. With
these contracts, the project manager assumes the risk of unforeseen conditions, but is usually able to complete the project at a lower
cost than with other contracts.
4.15.4 Incentives
Incentives or awards, such as completing work before a given date or managing costs to a given level, can be included in any of
the contract types. If final project costs are less than the expected costs, for example, both the buyer (the organisation) and the seller
(the contractor) might benefit in the cost savings based on a pre-negotiated sharing formula.
4.17. Using project management software
Hundreds of computer software products exist to help you manage project estimates and other plans more accurately and in much
less time. The right program can pay for itself in one six-month project. Managers can use project management software to store
and update project plans and also to enter status information once project work begins.
Consider the following as you choose project management software:
 Ease of use. How easy is it to learn and to use? Does the software have a good balance of powerful features and ease of use?
Although the software might make it easy to begin projects quickly, will it still have the power you need when you are ready for
it? Tutorials are helpful. Clear documentation and context-sensitive online help are a must.
 Project planning. The best programs let you generate activity outlines and summaries, such as work breakdown structures,
organization breakdown structures, and resource breakdown structures. They allow you to create custom calendars for both
activities and resources. They also provide planning tools that perform “what-if” analyses to evaluate alternative scheduling
scenarios.
 Resource management. If you manage several projects that use common resources, be sure the software can manage the projects
by sharing a central resource pool. This macro view of resource availability helps maximize available resources by resolving
scheduling conflicts and working within resource limitations.
 Baseline comparison. As your project moves from the planning stage to the operational stage, you will likely need to adjust
schedules and budgets from time to time. A good project management system maintains the original schedules and budgets as a
baseline for future comparison.
 Reporting. Does the system have the power to produce custom reports, or are you limited to standard, pre-programmed reports?
How easy is the report writer to use?
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 Multiple projects. Some software programs have a limit on the number of projects you can manage, or the number of activities
in a given project. Be sure the software can handle your workload. Also determine how the software merges or groups projects for
analysis.
 Customisation. Look for software that lets you customize screen layouts, spreadsheets, and diagrams to your company
preferences. Will you have to change your procedures to suit the program’s limitations, or is the program flexible enough to match
your processes?
 Access to project data. Can project data be shared with other software, such as spreadsheets, databases, and word processing
programs?
 Graphics. Can the program produce the graphs, charts, and diagrams you regularly use, or will you have to export the data to
another software product to produce them?
 Product support. Can you expect professional technical support from the vendor? Does the vendor understand project
management? Can the vendor help you apply the product to your needs?
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5. PLANNING THE ACTIVITIES
5.1. Sequencing activities
An important part of project planning is determining the logical workflow of the various activities you identified in the work
breakdown structure. This chapter will teach you how to create a network diagram, which is a graphical flow plan of the activities
that must be accomplished to complete the project.
5.1.1 Schedule Network Diagrams
Bar charts (such as Gantt charts) are helpful ways of communicating project information, but since they do not show the logical
relationships among activities as clearly, they are not as helpful in planning.
5.4.1 Using the Critical Path Method (CPM)
Using the network diagram, the next step is to determine the critical path. The critical path is the path through the network that
takes the longest total time. It therefore determines the earliest possible time the project can be completed.
6. PREPARING A PROJECT PLAN
In this chapter, you will learn how to put all these together into a workable project plan. You will learn how to apply the estimated
work hours or days to the calendar to determine the duration of each activity, considering weekends, holidays, and vacation
schedules as well as the availability of people and other resources.
6.1. Preparing schedules
After you have prepared the network diagram and identified the critical path, you are ready to prepare schedules by following two
simple steps:
1. Create the initial schedule using the early start and early finish times. If necessary, you can adjust the schedule later to the late
start and late finish times to account for the availability of resources. In other words, if the necessary resources are not available on
the early start date, the project manager can determine to begin the activity on the late start date.
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2. Assign a calendar date to the beginning of the first activity and convert the time durations on each activity to a calendar date.
Alternatively, you may assign a calendar date to the completion of the project and work backward to the beginning of the project.
6.4. Preparing resource plans
The best project plan in the world cannot be accomplished without the right people, materials, and equipment at the right place at
the right time. This section explains how to assign the right resources when and where they are needed. Consider the following
principles when assigning resources:
 Schedules are meaningless unless the right resources are available when the activity is scheduled to begin.
 If you cannot get the right resources at the right time, you may need to replan. Do not assign the wrong person to the job just
because no one else is available at that time.
 Assign scarce resources to activities on the critical path first.
 Obtain firm commitments from team members, functional managers, and senior management. Once commitments are made, the
committed hours no longer belong to the function, but to the project.
 Too few people on a project cannot solve the problems; too many people can create more problems than they solve.
 Balance critical resources by adjusting schedules where there is float. If the activity was scheduled to begin on the early start
date, try adjusting it to the late start date to see if the appropriate resources are available at that time. Meet with functional sections
to level the workload as much as possible to keep in-house resources busy and to use preferred outside resources as much as
possible.
 It may be necessary to increase the project duration to get the right resources at the right times.
6.4.1 Identifying the Required Skills
Identify the skills required for each activity as identified on the activity estimate sheets. Also note the skill level required. For
example, do not assign an entry-level editor to do a job specified for a senior editor. Likewise, you usually would not assign a
senior (and higher paid) editor to do a job that could be accomplished by an entry-level editor.
6.5.1 Recruiting Personnel
Recruit individuals who best meet the skill requirements that were identified during the creation of the work breakdown structure.
Plot each person (or group of people) and the project skill requirements on a responsibility assignment matrix.
6.6.1 Assigning People to Activities
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Assign the most appropriate people to each activity. A useful tool for determining the availability of resources is a resource
histogram, which may be prepared for an individual or for a group of people with similar skill sets. On the resource histogram,
block out time needed for the following:  Administrative activities (such as time cards, personnel meetings, breaks, personal leave,
and sick leave).
 Operational support (such as training classes, coordination meetings, internal consulting, answering phone calls, travel, research,
problem solving, crisis management, and other activities needed to maintain the operation).
 Project work (the days and hours the person, or other resource such as equipment, is committed to project activities). Schedules
often fail because they underestimate the hours required for administrative and operational activities. When this happens, fewer
hours than expected can be devoted to project work.
6.6.2 Levelling the Resources
When a person or other resource is overcommitted (such as on weeks beginning 4/27, 5/4, and 5/18 in Exhibit 6-5), add more
people or resources to match the needs or try to level the workload of existing people and resources using one or more of the
following options:
 Resources. Reallocate available personnel or resources to provide assistance or to replace the overcommitted resource. Authorize
overtime.
 Activities. When float is available, use it to shift the schedules by using the late start rather than the early start times. Use float to
extend the activity duration. (For example, rather than committing a person 100 per cent for two days, use her 50 per cent for four
days.)
 Project objectives. Reduce the scope of the activity, if possible, by approaching the activity in a different way. As you allocate
resources, it is important to consider the trade-offs in time, cost, and resources. For example, putting more employees on a particular
project may get the job done faster, but may be less efficient.
6.8. Preparing budget plans
Budgeting is the process of allocating the cost estimates to work items to establish a cost baseline for measuring project
performance. Small projects may not need extensive budget plans if you use in-house resources. Larger projects may require
extensive budget plans, including basic spreadsheets, cumulative spreadsheets, and cost line graphs. To prepare a simple budget
plan, do the following:
 Total the personnel costs from each activity estimate sheet.
 Total the direct costs from each activity estimate sheet. Remember to include project management and other operational costs.
 Total indirect (overhead) costs if your organization requires, they be included in your budget.
 Calculate cumulative costs.
 Determine when expenditures will be made to calculate the cash flow needed. Cash flow is usually planned according to a time
interval (daily, weekly, or monthly, depending on the size and length of your project).
 Prepare tables, charts, or graphs for each activity, for each functional section, and for the project as a whole.
6.9. Managing risk
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Risks are uncertain events or conditions that, if they occur, have a positive or negative effect on the project objectives. All projects
have a certain degree of risk that needs to be managed. The project manager determines where risks are likely to affect the project,
makes contingency plans for them, and responds to them when they occur. This section describes the risk management processes
of identifying, analysing, and responding to project risk.
The output of a risk management plan includes:
 Possible risks, potential causes, and how they may affect the project.
 Prioritized list of project risks, their owners, and planned responses.
 Warning signs of a possible risk occurrence.
 Secondary risks that may arise from the response to a risk event.
6.9.1 Identifying Risk
The first step in developing a risk management plan is to identify the potential risk events.
6.9.1.2. Determining Likely Risks
To identify potential risks, simply ask, “What could go wrong?” Review the work breakdown structure for the project, the cost
estimates, and resource plans and consider what might happen that could cause any aspect of the project to deviate from the plans.
Define specific risk events and describe what specifically might go wrong. For example, ground breaking may be delayed because
of legal problems in securing the building permit. Describe the effect of each potential event. Identify what would cause the risk
event to happen (often called triggers) and describe any conditions or signs that may warn you of the impending event.
Consider both internal and external events that could affect the project. Internal events are things under the control of the project
team, such as work assignments or cost estimates. External events are things beyond the influence of the project team, such as
technology shifts or changing economic conditions.
6.10.1.1. Conducting Ongoing Risk Identification
Risk identification is not a one-time event. Economic, organizational, and other factors will change during the course of the project
that may bring to light additional sources of risk. Risk factors should be identified at the outset of the project and then updated on
a regular basis throughout the life of the project.
6.11.1 Assessing Risk
Once you have identified the potential risk events to be included in the plan, the next step is to estimate the probability of occurrence
and determine the impact if the event were to occur. You should closely analyse potential risks associated with activities on the
critical path, since a delay in these activities is more likely to delay the final outcome of the project.
For each potential risk event, estimate its impact on the time, cost, scope, quality, and resources. Remember that a single risk event
could have multiple effects. For example, the late delivery of a key component could cause schedule delays, cost overruns, and a
lower-quality product. To help prioritize the potential risks, you may plot them on a chart.
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6.12.1 Responding to Risk
The purpose of risk response is to minimize the probability and consequences of negative events and to maximize the probability
and consequences of positive events.
6.12.1.1. Planning Responses
A response plan should be developed before the risk event occurs. Then, if the event should occur, you simply execute the plan
already developed. Planning ahead allows you the time to carefully analyse the various options and determine the best course of
action. That way, you are not forced to make a hasty, and perhaps less thoughtful, response to a threatening situation. 6.12.1.2.
Possible Responses to Risk
In developing a response plan, consider ways to avoid the risk, transfer it to someone else, mitigate it, or simply accept it.
 AVOIDING. It may be possible to eliminate the source of risk, and therefore prevent it from happening. This may involve an
alternative strategy for completing the project. For example, rather than assigning work to a new, less expensive contractor, you
may choose to reduce the risk of failure by using a known and trusted contractor—even though the cost may be higher. You can
never avoid all risk, but you can try to eliminate as many sources as possible.
 TRANSFERRING: It may also be possible to transfer some risk to a third party, usually for the payment of a risk premium. For
example, you can avoid the chance of a cost overrun on a specific activity by writing a fixed-price contract.
 MITIGATING: Mitigation plans are steps taken to lower the probability of the risk event happening or to reduce the impact
should it occur. For example, you can reduce the likelihood of a product failure by using proven technology rather than cuttingedge technology.
 ACCEPTING: When there is a low likelihood of a risk event, when the potential impact on the project is low, or when the cost
of mitigation is high, a satisfactory response may be to accept the risk. For example, say that the economy moves into a recession
midway into a project to reengineer a manufacturing plant for increased efficiency and output.
6.12.1.3. Developing a Response Plan
After considering the options of avoiding, transferring, mitigating, or accepting the risk, response planners may develop a risk
management plan, contingency plans, and reserves. A risk management plan documents the procedures that will be used to manage
risk throughout the project. It lists potential risk events, the conditions or signs that may warn of the impending event, and the
specific actions to be taken in response. Contingency plans describe the actions to be taken if a risk event should occur. Reserves
are provisions in the project plan to mitigate the impact of risk events.
6.12.1.4. Acting on the Response Plan
The project manager and other team members monitor the project throughout its life, looking for triggers and signs that may warn
of impending risk events. When risk events happen, management takes the corrective action identified in the risk management plan.
When an unplanned risk event occurs, a response must be developed and implemented. This is often called a workaround. After
the response is implemented, the risk management plan should be reviewed and updated if necessary. As changes in the project
occur, it may be necessary to repeat the steps of identifying, assessing, and planning responses to risk.
6.14. GETTING APPROVALS AND COMPILING A FORMAL PROJECT PLAN
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Now that detailed planning has been completed, compare the final schedules, cost plans, and project specifications with the original
project objectives. Where there are discrepancies, you should negotiate adjustments and get final approvals and commitment from
the customer, project sponsor, senior management, functional managers, and the project team. Then, create a formal project plan
containing all the planning documents.
6.14.1 Reconciling the Project Objectives
Compare the final schedules, cost plans, and project specifications with the original project objectives. If the project plans show
that support, now is the time to negotiate any final adjustments.
6.14.2 Getting Approvals and Commitments
Obtain written approvals from the customer, project sponsor, senior management, functional managers, and project team. Get
everything in writing. Unless it is on paper, it has not been said. Over time, people may forget the conditions attached to a promise
and only remember the promise.
 Internal adjustments. Negotiate revised estimates with the project team, find a different approach to complete the project, increase
personnel, schedule shiftwork, run some activities in parallel, or take more risks.
 External negotiations. Renegotiate the basic project objectives with the project sponsor.
6.14.3 Creating a Project Plan
The comprehensive project plan is the culmination of the planning process and the road map for project execution. The formal
project plan includes the following:
 Project charter, which formally authorizes the project, explains the business need the project addresses, states the project
objectives (time, cost, and scope), and defines the approvals and authority granted by the project sponsor or senior management.
 Schedules
 Project scope statement
 Resource plans
 Budget plans
 Risk management plans
 Monitoring and management plan (see Chapter 7)
 Change control processes (see Chapter 7)
 Project evaluation plan (see Chapter 8)
 Project reporting plan (see Chapter 8)
 Project closure plan (see Chapter 8)
It is important that these documents be formalized in writing and kept in a single binder or website so that they are accessible to all
members of the project team, the project sponsor, and the customer.
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7. MANAGING TIME, COST, AND SCOPE
7.1. INITIATING THE PROJECT
When you have completed the final schedules, cost plans, and project specifications, compiled a project charter, and received
proper approvals, you are ready to begin work on the project.
7.1.1 Kick-off Meeting
You can start a project on the right foot by holding a formal kick-off meeting with the project sponsor, customers, project team
members, and other stakeholders. This is a great opportunity to explain the roles and responsibilities of everyone present and
communicate the project plans clearly and concisely.
7.1.2 Communicating Project Plans
Be sure to communicate project information to all stakeholders: the project team, functional managers, senior management,
customers, and the project sponsor. Present the appropriate level of detail to each group. Management may be interested in
summary-level information, whereas team members need much more detail. Be sure to cover all areas of planning, including:
 Statement of the project objectives
 Work breakdown structure
 Logic network diagrams
 Schedules for individual activities and the project as a whole
 Charts showing estimated costs and projected cash flow
 Resource histograms
7.2. Setting up a monitoring and management process
Project management is the process of comparing actual performance to the plan, in order to determine the variances, evaluate
possible alternatives, and take appropriate corrective action. The ability to manage a project is directly tied to the effectiveness of
the project plan.
7.2.1 Principles of Monitoring and Management
The following general principles are useful in project management activities:
 Establish a formal process to control changes in the project (see the section “Controlling Changes in the Project” in this chapter).
Revise project plans as needed to keep them realistic and accurate, but only allow them to be revised by those who are authorized.
 Do not micromanage the project. Let functional managers and line supervisours develop for their own use a set of sub-activities,
cost plans, and detailed checklists to help them accomplish their activities.
 Assign problems to the lowest level of management that can make the decision and take action. Never present a problem without
a recommended solution. Otherwise, management may come up with an inappropriate solution or never give you a decision.
 Be sure that schedule progress, cost expenditures, and scope performance are calculated and reported using methods consistent
with the way the plan was established.
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 If you manage several projects at once, you may wish to rank them so you can handle regular-schedule projects differently from
fast-track-schedule projects. a. Significant, highly visible projects require more monitoring. b. Average projects require average
monitoring. c. Low-priority projects require less monitoring.
7.2.2 Establishing a Plan to Monitor and Manage the Project
Before the project begins, the project manager should consult with the project team, the customer, and the project sponsor to
determine the information needs, data collection methods, and frequency of data collection.
7.2.2.1. Determining Information Needs
The project manager determines what information is needed to manage the project. If the needed information is not collected, the
project cannot be managed. Gathering information that is not needed is a waste of effort.
7.2.2.2. Determining Data Collection Methods
The project manager determines how project status information will be collected.
 ELECTRONIC DATA COLLECTION: Electronic data collection can be quick and cost-effective. When team members have
access to a computerized system, they can input status information directly into the computer, making it immediately accessible to
the project manager and others. Electronic systems can share information, so information needs to be entered only once. For
example, work hours entered by team members can update project cost reports and also be transmitted directly to the finance
department for payroll. Although many people prefer electronic data collection, it is not recommended unless:
 The organization operates consistently under sound project management principles.
 The project team members have been trained in project management concepts and methods.
The project team has the skills and discipline to report correct data consistently.
 MANUAL DATA COLLECTION: If the organization lacks the maturity described above, manual data collection methods may
be preferred. These consist of traditional methods of paper time cards and status reports. Refer to Chapter 8 for examples of various
reports and forms that can be used to gather information as well as to report it.
 ON-SITE INSPECTIONS: The project manager gathers additional information by conducting scheduled and unscheduled onsite inspections. In addition to what the numbers say, the project manager needs to see first-hand how well the team works together
and if there are conflicts or other factors influencing performance.
 ONE-ON-ONE INTERVIEWS: A face-to-face interview is an effective way to gather information. In this setting, team members
can give their opinions, suggestions, and critiques of the work.
 TEAM MEETINGS: Although a meeting can be used to collect project information, it is usually not an efficient use of team
members’ time. However, it is important that the team meet together occasionally to confirm that the data collected match the
perspectives of the team as a whole. Team meetings are also helpful for brainstorming, coordinating work, building team spirit and
camaraderie, group decision-making, and achieving group consensus.
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7.2.2.3. Determining Frequency of Data Collection
The project manager establishes an update cycle for various types of data. This cycle may be immediate (data entered when an
event happens), daily, twice a week, weekly, twice monthly, monthly, and so on. Issues to consider when determining update
frequency may include:
 The requirements and expectations of the project sponsor.
 The average duration of the project activities. (For example, if most activities are scheduled to last a day or two, a weekly update
cycle would not be frequent enough.)
 Experience. (For example, in dealing with unknown personnel or subject matter, it may be appropriate to collect data more often
for early problem identification.)
7.3.4 Course of Action
The project manager develops and analyses solutions to the problem. If the project manager has sufficient authority, she decides
on a course of action. If not, she takes recommendations to the level of management that can make that decision. Taking action
includes the following steps:
 Implement the decision.
 Follow up to be sure the action solves the problem.
 Take additional action if necessary to solve the problem.
 Document the decisions that make significant changes in approved project plans.
 Take preventive action to be sure similar problems do not happen. (For example, double-check other estimates or analyse
procedures.)
7.5.1 Time Management
Time management is the process of comparing actual schedule performance to the baseline schedule to determine variances,
evaluate possible alternatives, and take the appropriate action. To effectively manage time, be sure the schedule plans are in
sufficient detail to adequately manage the activities.
7.5.1.1. Actions Consider the following actions to manage time:
 Systematically collect schedule performance data, including the following:
– Actual start time of each activity
– Estimated remaining duration of activities in a process
– Actual finish time of each activity
– Changes in time estimates
– New activities that have been identified
– Previously planned activities that are no longer needed
 Compare this status information with the baseline schedule.
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 Analyse variances to determine their impact. Variances can be positive or negative. The activity may have taken three days too
long, or it may have been completed three days early. Not all variances have a negative impact on the project, and some variances
are so small they do not deserve corrective action. Try to determine the cause of the variance so you can take corrective action,
where needed, to prevent it from happening again.
 Prepare and publish reports. See Chapter 8 for ideas on reporting, including examples of time management reports.
 Determine a course of action. If you determine the variance warrants action, determine what that action will be.
 Take corrective action. Act on schedule deviations quickly, especially in the early stages of the project when the tone of the entire
project is set. There are a variety of actions you may take to get the activity back on schedule, such as adding more or higher-skilled
personnel, adding additional equipment or other resources, or changing the sequence of activities to allow activities to be done in
parallel or to overlap.
7.5.2 Cost Management
Cost management is the process of comparing actual expenditures to the baseline cost plans to determine variances, evaluate
possible alternatives, and take appropriate action. To effectively manage costs, be sure cost plans are prepared with sufficient detail.
7.5.2.1. Actions Consider the following actions to manage costs:
 Systematically collect cost performance data, including the following:
– Labour hours expended
– Estimated remaining labour hours needed to complete activities
– Percentage completed activities in the process
– Non-labour expenditures to date
– Estimated remaining non-labour expenditures needed to complete activities
– Funds committed but not paid, and dates when these obligations must be paid
– New activities that have been identified
– Previously planned activities that are no longer needed
 Compare expenditures to the baseline cost plans.
 Analyse variances to determine their impact. Cost variances can be positive or negative. The activity may have cost more or less
than budgeted. Not all variances have a negative impact on the project, and some variances are so small they do not deserve
corrective action. Try to determine the cause of the variance so you can take corrective action, where needed, to prevent it from
happening again.
 Prepare and publish reports. See Chapter 8 for ideas on reporting, including example cost management reports.
 Determine the course of action. If you determine the variance warrants action, determine what that action will be.
 Take corrective action. Act on cost overruns in a timely manner, especially in the early stages of the project when the tone of the
entire project is set. Carefully analyse the deviations from the cost plan to determine where the overruns are coming from. You
may be able to find less expensive alternatives to the personnel, equipment, and materials being used.
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7.5.2.2. Common Causes of Cost Problems
Since costs can be a major source of frustration in a project, it is helpful to have a good understanding of where costs can get out
of control. Consider the following list of common causes:
 Poor budgeting practices, such as (1) basing the estimates on vague information from similar projects rather than the detailed
specifications of the project at hand, (2) failure to plan a sufficient contingency budget, (3) failure to correctly estimate research
and development activities, or (4) failure to consider the effects of inflation on the cost of materials or labour.
 Receiving or analysing status information too late to take corrective action.
 A climate that does not support open and honest disclosure of information.
 Indiscriminate use of the contingency budget by activities that too frequently overrun their budgeted cost.
 Failure to rebudget when (1) flaws are discovered, (2) technical performance falls below performance standards, or (3) changes
in project scope are approved. During the course of the project, many small decisions are made that ultimately impact costs. For
example, when engineering decides on the final design of a product feature, conventional accounting reports may not show the
impact of these design decisions on production costs. In that case, the project manager must make sure that the cost impact is known
before such decisions are made.
7.5.2.3. Avoiding Common Cost Problems
You can avoid such cost problems by following good estimating and budgeting practices, as described in Chapters 5 and 6. Careful
monitoring and quick corrective action will also help keep cost problems to a minimum. If you find yourself in budget trouble, you
may be able to recover by focusing on critical activities.
7.5.3 Scope and Quality Management
The scope document includes not only a description of the features and functions of the product or service but also quality measures,
such as technical specifications, performance requirements, grade or excellence of materials, the functionality of product features,
safety regulations, security issues, and environmental considerations. These quality measures must be defined in the project scope
statement in quantifiable terms that can be measured and reported.
These terms can then be used throughout the life of the project to manage project work and the quality of the product or service
created by the project. Many people think quality is synonymous with grade, excellence, or price, whereas quality is actually
conformance to specifications. Scope and quality management is comparing actual performance to the scope statement to determine
variances, evaluate possible alternatives, and take the appropriate action. It includes all the processes and activities needed to ensure
that the project produces the quality specified in the scope statement.
Project quality management encompasses the following areas:
 Customer satisfaction. An important role of a project manager is to ensure that the project produces what it was expected to
produce. Along the way, it is important to understand and manage the expectations of all project stakeholders.
 Prevention rather than inspection. Modern quality management focuses on planning, designing, and building quality into the
products of the project, rather than trying to inspect them in. The cost of preventing mistakes is usually less than the cost of
correcting them after they are found in an inspection.
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 Continuous quality improvement. Modern quality improvement techniques focus on improving the quality of project management
and production processes, as well as the quality of individual project results.
 Management responsibility. A successful project requires the participation of management to provide the resources and approvals
needed by a project.
7.5.3.1. Actions Consider
the following actions to manage scope and quality:
 Systematically collect performance data. Are the specifications being met as identified in the scope statement? Are the quality
standards being met as identified in the scope statement?
 Compare performance to the scope statement.
 Analyse variances to determine their impact. Variances can be positive or negative. The finished product may not meet the
specifications or it may exceed them.
 Prepare and publish reports that detail where the project is meeting, not meeting, or exceeding project specifications. See Chapter
8 for examples of reports.
 Determine a course of action. If you determine the variance warrants action, determine what that action is.
 Take corrective action. Act on scope deviations quickly, especially in the early stages of the project, when the tone of the entire
project is set. Corrective action may consist of penalties for non-conformance or rewards for conformance to project specifications.
7.5.4 Resource Management
The project manager must develop and manage all resources used in a project. Human resources are more difficult to manage than
nonhuman resources. Resource management is the process of comparing actual performance to the resource plans to determine
variances, evaluate possible alternatives, and take the appropriate action.
7.5.4.1. Actions Consider the following actions for resource management:
 Be sure that all team members understand the basic objectives of the project and know how their tasks contribute to the project
as a whole.
 Have team members prepare individual plans for accomplishing their work.
 Ensure that team members have the appropriate skills and resources to do the job.
 Empower team members to accomplish their tasks by giving appropriate authority and information. Also, provide supervision
and performance feedback.
7.5.4.2. Avoiding Common Resource Problems
Careful monitoring and quick corrective action help keep resource problems to a minimum. If team members manage appropriately,
then weekly reports simply serve as checks and balances. A project is in control at the macro level only when all team members
are in control of their own work at the micro level. Rather than micromanaging team members, the project manager sets up an
environment wherein team members can manage their own work.
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7.6.1 Tools for Managing Project Objectives
A variety of tools and techniques may be used to determine whether work is being accomplished according to the quality level and
specifications defined in the project planning stage. Some of the more typical methods are discussed in the following sections.
7.6.1.1. Inspection
Inspections include measuring, examining, and testing and are used to determine whether the results conform to predefined
specifications. Inspections should be performed on individual activities and also on the final product of the project. A variety of
inspection forms and checklists may be developed to allow information to be collected quickly and in a standardized format.
7.6.1.2. Statistical Sampling
Because it is not always possible or practical to inspect every activity or every item produced, the principle of statistical sampling
may be applied to ensure that inspection results are reliable. For example, you can choose to inspect ten activities at random out of
the total of one hundred activities. Principles of statistical sampling and probability must be used to determine the number of items
out of the total that must be inspected in order to apply those results to the total with reasonable accuracy. A great body of literature
is available on appropriate sampling techniques.
7.6.1.3. Flowcharting
Flowcharts can provide useful information about process flow and may be helpful to analyse how problems occur. It may be
sufficient to have a general top-down flowchart that shows the major steps in the process.
7.6.1.4. Control Charts
Control charts are graphs that display periodic results along with established control limits. They are used to determine if a process
is in control or in need of adjustment. Control charting helps to distinguish between normal variations that are to be expected and
unusual variations produced by special causes that need to be identified and corrected.
7.6.1.8. Earned Value Analysis
Earned value analysis (also known as variance analysis) is a way to measure and evaluate project performance. It compares the
amount of work planned with what is actually accomplished to determine whether the project is on track.
The first step in earned value analysis is to determine the following three key values:
1. Planned value (PV) is the planned cost of work scheduled to be done in a given time period. The amount of PV is determined by
totalling the cost estimates for the activities scheduled to be completed in the time period. Planned value is also called the budgeted
cost of work scheduled (BCWS).
2. Earned value (EV) is the planned cost of work actually performed in a given time period. This is a measure of the dollar value
of the work actually performed. The amount of EV is determined by totalling the cost estimates for the activities that were actually
completed in the time period. Earned value is also called the budgeted cost of work performed (BCWP).
3. Actual cost (AC) is the cost incurred to complete the work that was actually performed in a given time period. The amount of
AC is determined by totalling the expenditures for the work performed in a given time period. It should include only the types of
costs included in the budget. For example, if indirect costs were not included in the budget, they should not be included in AC
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calculations. For example Schedule variance (SV). Schedule variance is determined by subtracting the planned value from the
earned value. This calculation measures the difference between the planned and the actual work completed. A positive result means
the project is ahead of schedule; a negative result means the project is behind schedule.
SV = EV − PV
Cost variance (CV). Cost variance is determined by subtracting the actual cost from the earned value. It measures the difference
between the planned (budgeted) cost and the actual cost of work completed. A positive result means the project is under budget; a
negative result means the project is over budget.
CV = EV − AC
Once these calculations are made, various indices or ratios can be used to evaluate the status and effectiveness of project work.
These efficiency indicators provide valuable information that can be used to manage the project.
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8. EVALUATING AND REPORTING ON PROJECT PERFORMANCE
A project is like a journey, and project plans (such as work breakdown structures, schedules, and cost reports) serve as road maps
to help team members measure their precise location. Project reviews are checkpoints along the way to ensure the project is on
course. If the project has deviated from course, the review can identify the variance and help you make the proper adjustments.
8.1.1.1. Ongoing Reviews
Work on the project should be reviewed constantly by project team members as part of an ongoing quality assurance program.
Even though others may inspect for quality at specified checkpoints, the responsibility for quality rests with individual workers.
They must feel a commitment to produce quality work, even if no one were to inspect it!
Ongoing reviews should ensure that the standards included in the project scope statement are being applied to the work. Such
standards may include safety regulations, security issues, licensing requirements, environmental considerations, and legal
requirements.
8.1.1.2. Periodic Inspections
Team leaders, functional supervisors, or quality inspectors should review project work periodically (both scheduled and
unscheduled) to ensure that project objectives are being met. These may be daily, weekly, or monthly inspections according to the
needs of the project.
8.1.1.3. Milestone Evaluations
Additional project evaluations should take place when milestone events are reached (for example, at the conclusion of each major
phase of the project). Such an evaluation is used to certify that all work scheduled for that phase of the project has been completed
according to specifications.
8.1.1.4. Final Project Audit
A final audit should be made at the conclusion of the project to verify that everything was completed as agreed upon by the project
sponsor, customer, and project team. This audit provides information that may be used in project closure and acceptance.
8.1.2 Considerations in Project Evaluations
Each of the four types of project evaluation should consider the quality of work, team performance, and project status.
8.1.2.1. Quality of Work
Each evaluation should review the work performed to ensure it meets specifications. The project scope statement specifies the
project scope and quality goals. The audit should determine whether proper quality has been maintained, or whether quality has
been compromised to meet schedule and cost objectives. For example, in a home construction project, quality evaluations should
determine if the proper materials have been used, or if lower-grade lumber was substituted to make up for cost overruns.
8.1.2.2. Team Performance
Sports teams review game films periodically to evaluate their performance and see where they need to improve. Without this kind
of review, they may become very good at playing badly. Project teams also need to evaluate whether they are performing as well
as they can. Such reviews may focus on the efficiency and effectiveness of the work performed. They may analyse the work
processes to determine if there is a more efficient workflow. These reviews may be conducted by the project team members
themselves, the project manager, independent auditors, or other specialists.
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 COMPARISON WITH PAST PERFORMANCE: If consistent data are gathered over time, periodic reviews provide a history
to which current performance may be compared. This comparison over time shows whether team performance is improving or
declining.
 COMPARISON WITH BENCHMARKS: Team performance may also be compared with that of other companies or industry
standards. Benchmarking is the process of defining a standard or point of reference to measure quality or performance.
8.1.2.3. Project Status
The project status review compares the planned with actual results and notes the variances. It reports any deviations in the schedule,
cost, scope, or performance, and whether such deviations appear to be likely in the future.
8.3. Reporting on project objectives
Project managers spend much time collecting and analysing data, but often they exert too little effort to determine what information
needs to be communicated and to whom. Reports should be designed to convey concise information to the target audiences. Because
projects are approved on the basis of three objectives — time, cost, and scope — it makes sense to focus reports on these three
aspects. This section discusses issues to consider as you prepare and publish reports.
8.3.1 Reporting Considerations
As you prepare reports, use the following guidelines:
 Maintain concise, top-quality project plans and status reports. Be sure everything you publish is accurate.
 Keep all stakeholders, including team members, customers, project sponsors, functional managers, and senior management
appropriately informed. For each audience, determine what information they need to perform their functions and design reports
accordingly. Provide just the data they need to make decisions and take corrective action.
 Use exception reporting by including only major variations from the plan. Since you do not have time to digest pages and pages
of project information, use software programs to analyse the information and report on variances from the project plans. You can
then focus your attention on these problem areas. Give stakeholders summary information about activities successfully completed
and describe your plans to correct any deviations from the plan.
 Choose the best format for each report (text, table, line graph, histogram bar chart, or Gantt chart).
 Clearly state the purpose of each report and the action to be taken.
8.3.2 Graphical Reports
It is important to make reports easy to read. The first step is to be sure reports contain only the information needed by the recipient.
Next, determine whether the reports can be further simplified by converting data to graphics. This is particularly useful in summary
reports sent to upper management. A simple pie chart or line graph may be much easier to interpret than a page full of text or
numbers.
8.3.3 Reporting Per Cent Complete
Planning and reporting per cent complete is particularly useful when one part of the activity is more difficult than another.
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8.3.4 Sample Reports
Sample reports include status reports, schedule baseline plans, schedule status reports, summary schedule status reports, cost
reports, cumulative cost reports, and cumulative cost line graphs.
8.3.4.1. Status Report
The status report in Exhibit 8-3 is highly graphical and presents a lot of information quickly. It was designed to report summary
information to upper management on the three aspects of the project objectives: schedule, cost, and scope.
 Schedule information is presented on a single timeline, with a solid arrow above the line indicating performance to date (in the
example, positioned at the end of the first week of May).
 Cost information is presented next in a chart showing cumulative project expenditures. The dashed line shows that actual
expenditures to date are more than planned. Furthermore, the dotted line shows a projection to overspend even more before the
project is completed.
 Scope information identifies a few key indicators that are listed with a simple “ok” or a warning of potential problems.
8.3.4.2. Schedule Baseline Plan
The Gantt chart shows the baseline plan for a software demonstration project. The activities are shown as grey bars. The black bars
represent a summary of the activities in each phase of the project. The lines show dependencies between the activities. This is the
baseline schedule plan distributed to everyone involved in the project.
8.3.4.3. Schedule Status
Report Because everyone involved with the project is familiar with the baseline plan, a project manager may decide to use the same
chart to monitor and report on progress throughout the life of the project.
8.3.4.5. Cumulative Cost Report
The spreadsheet in Figure 8.8 is similar to the cost report but shows cumulative costs to date and the anticipated total costs at the
completion of the project.
8.3.4.6. Cumulative Cost Line Graph
The report in Figure 8.9 shows the same information as the previous report but in graphical form.
8.3.4.7. Instructions on Reports
Reports are most helpful when they clearly explain the purpose of the report and the action requested.
8.6. Closing the project
A good project management methodology includes formal steps to close the project. The purpose of project closure is to verify that
all work has been accomplished as agreed upon and that the project sponsor or customer accepts the final product. This is often
called scope verification. At times, it may be difficult to get the project sponsor or customer to agree that the project is finished.
The steps involved in project closure ensure that all payments are made and finances reconciled. Project documentation and final
reports are completed, and any remaining budget, materials, or other resources are properly dispersed.
8.7.1 Lessons Learned Documentation
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At the conclusion of a project, as well as at the end of major phases of a project, it is helpful to gather the team together and collect
information about what went wrong, what went well, the causes of issues and variances, the reasoning behind the corrective actions
taken, and the results achieved. These documented lessons learned can also contain advice for future projects. This documentation
then becomes part of the historical database for the project and can also be used to guide other similar projects.
Summary
A good project management methodology includes formal steps to close the project. The purpose of project closure is to verify that
all work has been accomplished as agreed upon and that the project sponsor or customer accepts the final product. The steps
involved in project closure ensure that all payments are made, finances reconciled, final documentation completed, and remaining
budget, materials, and other resources properly dispersed. The final step ensures that all lessons learned are documented and added
to the project history to be shared with future projects.
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